Favorite Philanthropy
- #1 - St. Jude’s Research Hospital
- #2 - TAPS – Tragedy Assistance Program for Survivors – peer support network for families of America’s fallen military heroes
Interests
- My grandchildren
- Crafts – any kind
- Traveling - anywhere
Favorite Offit Advisors Value
- Treating every client the same as a close family member – doing what is in the best interest of the client
Your philosophy on client service
- Every client should feel as though they are the only client. Nothing is as important as their needs.
What gets you out of bed in the morning
- The excitement of the unexpected. You never know what today will bring.
What could you give a 30-minute presentation about with no preparation?
- Office methods and procedures
Name one thing you’d spend more on to get the best quality
- Clothing and Travel – sorry but I have to name two things!
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Ben Offit, CFP® is featured in Baltimore Magazine as a 2023 Five Star Wealth Manager for the Sixth Consecutive Year
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To receive the 2023 Five Star Wealth Manager award, researched and managed by Five Star Professional, a wealth manager must meet 10 objective eligibility and evaluation criteria associated with wealth managers who provide quality services to their clients. Wealth managers do not pay a fee to be considered or placed on the final list of 2020 Five Star Wealth Managers.
The Five Star award is not indicative of the wealth manager's future performance.
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Ben Shares Thoughts on Revamping Personal Finance to Bloomberg Report
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A Bloomberg survey found many professional and individual investors are still counting on the 60/40 portfolio to beat inflation in the long run, but financial planner Ben Offit of Offit Advisors thinks it’s an outdated concept.
Offit says clients only need to hedge against down markets when they’re close to retiring and drawing on their portfolio. Keeping two to five years worth of expenses in fixed income guards against needing to sell stocks into a down market. The rest of the portfolio goes into equities, and “that has nothing to do with a percentage basis,” he said.
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Deposits at U.S. banks are up nearly 30% since before the pandemic, to $17.3 trillion. The New York Times, August 25, 2021
About 1,650 “dollar stores” are expected to open this year. There are more than 34,000 such stores in the U.S., more than all Walmart, Starbucks, and McDonald’s outlets combined. The Washington Post, August 20, 2021
“The stock market is a device for transferring money from the impatient to the patient.” Warren Buffet
Foreign automakers now employ more U.S. workers than domestic carmakers do. About 51% of the 999,000 U.S. workers in the motor vehicles and parts manufacturing sector are employed by companies based in other countries up from 34% in 2009. Yahoo!Finance, August 31, 2021
Manhattan is the most densely populated borough in New York City and is home to roughly 1.6 million people. With an area of nearly 23 square miles, more than 72,000 people live in every square mile. If the entire world lived with this population density, all of humanity could fit into the country of New Zealand. Overview
“Status quo, you know, is Latin for ‘the mess we’re in.” Ronald Reagan
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10 Steps to Become A Millionaire
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Americans can become millionaires in many different ways – including real estate, business, inheritance, etc. However, I believe the surest path for most Americans is simply by saving and investing, and effectively using your company’s 401k plan. So here is a clear 10 step path to joining the ranks of America’s 401(k) millionaires:
- Sign up for your 401k and do it TODAY.
- If your company offers a match, ALWAYS contribute up the full match, because it is an instant 100% rate of return. For example, if in order to get a 3% match, you need to contribute 3%, that is a 100% rate of return because irrespective of market performance, the company is putting in for you the same amount that you are. ALWAYS CONTRIBUTE AT LEAST UP TO THE MATCH, it’s hard to beat from a rate of return perspective.
- After you are putting in the minimum to capture the maximum match, save as much as you can. The only caveat here, is if you have other more important short term priorities or financial obligations. For example, if you need to put extra money towards buying a new home, or medical expenses those may take priority. Or if you have high interest debt, like credit card debt at 15%, it may make more sense to pay that off before putting extra money into the 401k. Once those are paid off, redirect what you were paying towards those expenses or higher interest debt into the 401k!
- Take 20 minutes to see if a Financial Planner or CPA can help determine if you are better off using a Roth 401k or a Traditional 401k – the difference in taxes between now and later can really make a difference.
- Focus on your asset allocation and investment mix, and start with a bias towards growth and stock allocation. Too many 401k investors hold far too much of their account in bonds, which should be kept to a minimum for those trying to accumulate long term wealth. To get to millionaire status, you will need to be more of stock owner, not a bond lender.
- Don’t market time! Every time you get paid, invest each pay period, no matter what is happening in the markets! IGNORE THE NOISE! Don’t pay attention to the up and down movement of your account. Make automatic contributions each pay regardless of how the market is doing right now.
- If you have the cash flow to do so, accelerate your contributions as early in the year as possible. For example, if your plan is to max out your 401k for the year, and you can do it in 6 months instead of 12 months, this gives your money more time to grow. However, before doing this, check with your HR representative to ensure that you won’t lose any of your company match by doing this.
- Pay attention to costs of the funds and get familiar with the costs of each funds, and have a bias towards lower cost funds.
- Utilize funds that represent indexes. For example, you could incorporate funds that represent that S&P 500 index or International Indexes. Make sure you have diversification across the main asset classes – Large Cap, Mid Cap, Small Cap, International Developed Markets, International Emerging Markets, Real Estate, Commodities.
- Wait until you reach full retirement age (at least 59.5 years old) to withdraw your funds, so you won’t pay a penalty for an early withdrawal. Let tax-deferred compounding work for you as long as possible!
If you follow these tips, for a few decades, it is almost certain you will become a millionaire!
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Weak Second Half of August Pushes Stocks & Bonds Lower
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HIGHLIGHTS
- Market strength from July failed to continue through August as stocks and bonds declined during the month.
- Bonds rallied in July, but the 10-year U.S. Treasury yield rose in August. After ending July at 2.67%, the yield closed August at 3.15%, which created a challenging environment for bonds.
- No FOMC meeting was held in August, but the annual meeting of central bankers in Jackson Hole, Wyoming was consequential. Chairman Powell’s keynote speech reinforced his current hawkish stance and stocks tumbled.
- Slower growth is impacting the economy with the Fed poised to continue to hike rates. We don’t believe we are in a recession currently, but the odds of a mild recession next year have increased.
EQUITY MARKETS
Equity index returns for August were as follows: The S&P 500 fell -4.08%, the Dow Jones Industrial Average declined -3.72%, the Russell 3000 slid -3.73%, the NASDAQ Composite slumped -4.53%, and the Russell 2000 Index, a measure of small-cap stocks, had the most modest declines, down -2.05%. For the first eight months of 2022, the returns in the same order were as follows: -16.14%, -12.01%, -16.92%, -24.07%, and -17.16%.
After coming off a strong July, stocks could not continue that momentum through August under the pressure of rising interest rates. Stocks started the month off strong, completing close to a 50% retracement from the low point reached by the S&P 500 in mid-June. However, the second half of August proved challenging, and stocks dropped from that point to close the month in negative territory. Likewise, the VIX Index made a rather steady move higher from the mid-point of the month going from below 20 to end August at 25.87. Ongoing concerns of elevated inflation and the Fed’s aggressive response of raising rates continued to weigh on the market and create a more volatile period for stocks during the month.
Although most pockets of the equity market struggled in August, growth came under particular pressure once again. The headline Russell 1000 Index fell -3.84% in August with the Russell 1000 Growth Index down -4.66% and the Russell 1000 Value Index declining a more modest -2.98%. That continued a theme seen most of the year with value outperforming growth on a relative basis and for the first eight months of 2022, those two indices were down -23.19% and -9.85%, respectively.
Small caps had a better relative August compared to large caps, but in contrast to large caps, the bias favored growth. The Russell 2000 Value Index declined by -3.16% in August, while the Russell 2000 Growth Index fell a more modest -0.94%. Year to date, those indices are still down -12.17% and -22.29%, respectively. We continue to use our disciplined approach of seeking out what we believe are high-quality companies with improving business conditions and good prices, and those companies can be found in both the value and growth universe.
International stocks were mixed in August as emerging markets were able to post a modest gain while developed markets declined. The MSCI ACWI ex USA Index, a broad measure of international equities, fell -3.22% for the month, and was off -18.34% so far this year. The MSCI Emerging Markets Index posted a modest gain of 0.42% but was still off by -17.49% year to date. As would be expected with the Russian invasion of Ukraine, emerging Eastern European stocks continue to be the worst regional area this year. Both U.S. and international equities have struggled this year with an aggressive Fed rate hike cycle, high inflation, and slowing economic growth.
FIXED INCOME
Fixed income returns were as follows for August: the Bloomberg U.S. Aggregate Bond Index declined -2.83%, the Bloomberg U.S. Credit Index dropped -2.83%, the Bloomberg U.S. Corporate High Yield Index slid -2.30% and the Bloomberg Municipal Index fell -2.19%. As would be expected, the 30-year U.S. Treasury Index had some of the worst results, dropping -4.41% for the month, while the general U.S. Treasury Index slumped -2.48%. For the first eight months of 2022, the returns for these indices in the same order were as follows: -10.75%, -13.70%, -11.22%, -8.62%, -24.97%, and -9.98%.
After hitting a multi-year closing high of 3.49% on June 14, the 10-year U.S. Treasury yield moved lower from mid-June through July, but that trend reversed course in August as yields rose sharply again. Simply put, the 10-year U.S Treasury yield closed August 1 at 2.60% but closed August 31 at 3.15%. Clearly, that increase in interest rates put pressure on bond prices and returns suffered during August. While short-term returns are negatively impacted by rising rates, long-term returns for bonds have become more attractive with the higher yields being offered.
Bonds have struggled this year as there has been a repricing of interest rates across the yield curve and across bond sectors under this Fed rate tightening cycle. Recall that in 2021, the Bloomberg U.S. Aggregate Bond Index recorded only its fourth annual decline since its inception in 1976 – and the worst year on record for the Agg was 1994 when it declined -2.92%. As it turns out, the year 1994 was another period when the Fed was in a rate hike cycle. We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. We also believe that the role bonds play in a portfolio, to provide stable cash flows and to help offset the volatility of stocks in the long run, has not changed. In fact, bonds are offering higher yields than they have in a number of years and as a result, we believe they are becoming a more attractive asset class.
Source: Clark Capital Benchmark Review, September 2022
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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